Credit Card Balances Rise: Are Consumers Stretched?

More

There's no doubt about it: American consumers beginning to let their credit card debt grow again. For just the second time in 31 months, revolving credit rose in March, according to the Federal Reserve. Non-revolving debt also increased during the month. That brought up total consumer credit outstanding for the sixth straight month. Americans may finally be done paying down their debt.

Here's a chart showing how consumer credit has shifted since the recession began in December 2007:

consumer credit 2011-03.png

You can see that the decline in revolving debt had been slowing for some time. In December 2010, it ticked up for the first time since August 2008. That was easily blamed on holiday shopping, once balances began declining again in the two months that followed. But there's no similar explanation for credit card debt rising again in March. It was up 2.9% on an annualized basis, which is about $2 billion compared to February.

Non-revolving credit also rose in March, slightly faster at 3.0%. March marks eight months straight that non-revolving balances have risen.

It's hard to know for sure why consumers have decided to begin increasing their credit card debt again. A major effort to pay down debt had occurred over the prior two-plus years. One potential explanation is that rising gas prices stretched finances, forcing some people to run a credit card balance in March. If gas prices decline, and revolving credit falls with it, then we have our answer. Alternatively, this increase in card balances could simply mark a turning point where consumers are again eager to spend on credit.

Jump to comments
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
Get Today's Top Stories in Your Inbox (preview)

Social Security: The Greatest Government Policy of All Time?

It's the most effective anti-poverty program in U.S. history. So why do some people hate it?


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In